Bitcoin Crash? What History and the Current Trend Shows Us and What to do Next
Bitcoin and the greater cryptocurrency market have been in free fall for the past two weeks. The cryptocurrency market and Bitcoin have reacted to seasonal trends ahead of the 2020 rewards halving, but is there more? What can we surmise from this bearish trend that threatens the price of Bitcoin and the marketcap of the cryptocurrency market?
First, let's look at the recent trend. Our source is Coinmarketcap. The total marketcap of the cryptocurrency market has fallen below $200 billion, and Bitcoin's market dominance has fallen slightly to 66%. The recent move has rocked Bitcoin to a price of $7,100 and has caused major cryptocurrencies including Ripple's XRP and Etheruem to experience double digit percentage paper losses. This was a definite bearish move.
No one should be surprised by the recent decline in the Bitcoin price. Bitcoin is a seasonal asset, with a predictable decline that occurs in the fourth quarter every year. Bitcoin typically declines in December after a runup that occurs between July and Novemeber. Bitcoin peaks in November, and sells off to cover holiday expenses. The asset typically has a small rise in later February to early March. This is the cycle that has historically been true.
Bitcoin's seasonal trends are often punctuated by macro trends including governmental support or regulation. It can also be dramatically supported during rewards halving. Bitcoin typically enters a bull-market six months before its halving. Miners must adjust to the new difficulty, anticipate the price action, and hold their mined Bitcoin to profit from the historical move. The last rewards halving, which occurred in 2016, preceded a bull market. We are about to complete a full market cycle for Bitcoin that began in 2017, and will end in the first quarter of 2020.
What should an investor or trader do now? We can safely anticipate further downside, and the upside will likely present itself around February of 2020 that will likely be bolstered due to the impending mining rewards halving that will reduce rewards from 12.5 BTC/block to 6.25 BTC/block. This is the core of Bitcoin, and the product of Bitcoin's 10-minute block heartbeat.
Are altcoins including EOS, Etheruem and XRP worth picking up here? If we anticipate further losses in Bitcoin, which holds 66% market dominance, I would not recommend Recommend bottom fishing here. I did pick up some STEEM and a Litecoin after the fall, but this was a speculative buy. Altcoins may spring back as traders use leverage to buy, but it is a speculative move that could leave investors with large paper losses. I am buying STEEM at these prices for use on the Steemit platform, but I so anticipate further pain. As an investor, I am waiting for a $6,000 Bitcoin price.
Sources:
Picture from Pixabay.
https://cryptobriefing.com/bitcoin-7000-market-cap-lowest-point/
https://coinmarketcap.com/
